SolFocus, the Palo Alto company that produces solar power with less silicon — a major advantage given today’s silicon shortage — is about to finish raising $32 million.

The SolFocus deal, reported this morning by VentureWire (sub required), is significant because it underscores how hot this sector is right now. VentureWire did not mention some of the back-story: We’re hearing there was a major fight by venture capitalists for this deal — that a major venture firm swooped in and stole the deal from another.

Here is why SolFocus’ technology, specifically, is attractive: Known as CPV, for Concentrator Photovoltaics, it uses lenses and mirrors to concentrate sunlight on a small, heat-tolerant silicon chip — in the end creating energy with less silicon, which is a really good thing given the dearth in silicon supply right now.

Venture capitalists are also telling us that the latest heat-wave here in Silicon Valley is helping green technology companies raise cash — as news of power outages in LA (shutting down MySpace) and around the southern San Francisco Bay Area brings the energy problem to everyone’s real lives.

We haven’t pinned down the details of this deal, and don’t want to speculate until we are certain. Let’s just say we’ve mentioned the aggressive ways of the Menlo Park firm New Enterprise Associates, which recently finished raising a huge venture fund. It has a serious vault of cash to put to work.

So the word is that NEA has led with an $18 million investment, and that the full venture round is still being finished. NGEN Partners, which invested in the $3.5 million seed funding, along with Yellowstone Capital and individual investors, apparently also boosted its investment.

Scott Sandell, a general partner with New Enterprise Associates, will join Steven Parry, a partner with NGEN Partners, on the company’s board. We’ve contacted to Sandell to see if he will fill us in with more.

We first reported about SolFocus back in February when it announced a partnership with PARC, the research institute, to develop technology it said will cut the cost of solar power in commercial buildings by at least half.

It will be in production this year. And they want to cut costs even more within three years.

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